The Poverty Premium in Greater Manchester
Known as the ‘poverty premium’, it has long been understood that low income households in the UK face higher costs for certain items. GMPA’s research, published in November 2018, shows that low income households in Greater Manchester could be paying more than £1000 over the odds for everyday goods and services compared to those on middle and higher incomes. You can download the report here
The extra costs are partly the result of variations in costs between different payment methods (e.g. people on low incomes are more likely to pay for energy through a prepayment meter), because people on low incomes are less able to buy in bulk or because of an inbuilt disadvantage within a marketplace (e.g. higher insurance premiums for people living in deprived areas).
GMPA’s poverty premium table shows how the extra costs can mount up.
Table 1: An illustration of the poverty premium in Greater Manchester (2018)
|Typical cost||Cost to low income family||Difference|
|Loan for £500||£500||£757.78||£257.78|
|Household white goods (average cost across multiple items)||£233.50||£451.75||£218.25|
|Annual gas and electricity bills combined||£935.20||£1,077.83||£142.63|
|Home contents insurance||£51.46||£61.33||£9.87|
Alongside this research GMPA carried out an in-depth questionnaire with over 100 low income residents from across the city region. The questionnaire highlighted the extent to which low income residents in Greater Manchester are at risk of the poverty premium, with:
- Two-thirds saying they don’t have access to a bank account overdraft facility.
- A quarter saying they are having to borrow money to pay for everyday living cots and bills.
- Half saying they use a prepayment meter to pay for electricity and gas.
Greater Manchester Poverty Action also considered other areas of spending, not captured in the poverty premium table, where low income households could be facing extra costs. GMPA found that people shopping at local convenience stores in deprived parts of Greater Manchester could be paying 36% more for food and household items compared to shopping at a large supermarket.
Download our report
GMPA’s report, The Poverty Premium in Greater Manchester, can be downloaded here. The report details the research findings and argues that steps should be taken locally to help address the poverty premium. Initially GMPA wants to see:
- Greater promotion of and support for credit unions in Greater Manchester so that more people can access low interest loans
- Support for food pantries (food clubs that provide food to people in return for a small membership fee) and other initiatives that directly combat the poverty premium
- Local authorities acting as the first port of call for people facing a financial crisis so that people are not driven into the arms of high interest lenders.
Addressing the poverty premium
To support GMPA’s work in this area we invited people from across our network to contribute articles looking at how certain aspects of the poverty premium can be addressed. We want this to act as a resource for decision makers looking to end the poverty rip-off facing low income households.
The Poverty Premium – Response to APPG on Poverty Inquiry.
You can also read GMPA’s response to the All Party Parliamentary Group on Poverty Inquiry: Poverty Premium and Business Toolkit herePoverty Premium